Recently, the European Court of Justice, Europe’s top court, ruled that in vehicle insurance matters, price discrimination due to gender violates laws protecting gender equality.
The Association of British Insurers said that as a result of this decision, women in the U.K. could face a 25% rise in insurance rates, while males in the country could expect their insurance rates to drop by 10%.
The insurance companies and some politicians are disappointed by the ruling, citing facts that suggest male drivers are considerably more risky than female drivers; “a male driver under 21 is twice as likely to have an accident than a woman under 21, insurers say ... Moreover, the development of the new discipline of ‘gender medicine’ in places like Germany and Austria has shown that men and women ... react in different ways to the same medicine, and therefore need different treatments.” This evidence suggests that males and females are truly different in classification and that gender can be considered for differential insurance pricing.
Others reject that argument, citing racial differences as unsuitable for being used for differential pricing. They say insurance price should be determined on other factors such as number of previous accidents, age, and how much the person expects to drive.
I personally think that, morally, this is a step in the right direction. Pricing should be based on changeable variables, things that either the person can change or things that change naturally with time. One can't change his or her own gender or race. Therefore, I think it's unfair that pricing can be determined based on gender. It is true that there are other scenarios in which gender can be used as a factor, like in college admissions; however, I think that is distinguishable because in that case, diversity is a compelling educational interest. Is there a "legitimate" interest for this discriminatory pricing?
What do you guys think? Do you think differential insurance pricing is a form of price discrimination? Is the European Court of Justice justified in its ruling? In the U.S., do you think the overwhelming evidence that suggests males are more reckless drivers would be enough to pass the intermediate scrutiny test (since gender is not a suspect classification, even though gender discrimination is an ongoing problem)?
By the way, I should add that currently gender IS suitable to be used for differential insurance pricing in the U.S.
1 comment:
Honestly, I think that it is pretty well proven that on the whole, teenage male drivers are more reckless than female drivers, so maybe insurance companies should have the right to discriminate. However, not all teenage male drivers are reckless and there are many bad drivers among females, so it seems like everyone should take some kind of merit-based test for their insurance rates. Although a merit-based test would definitely be more fair, it is probably not practical. Too bad.
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